French beat out US on Egyptian nuclear deal

ByThomas Stauffer, Special to The Christian Science Monitor, Dr. Stauffer is research associate at the Harvard Center for Middle East Studies.March 19, 1981

Paris
— American negotiators were dispatched this week to Cairo in a sudden effort to finalize the long languishing United States-Egypttian agreement on nuclear power.

Following in the lake of last month's equally sudden Franco- Egyptian nuclear accord, the precipitate fielding by the US of this negotiating team suggests an emerging nuclear rivalry in the Middle East.

This in turn adds a possible nuclear dimension to the "European option" for peace and political presence in the Middle East.

The swiftly reached agreement between Egypt and France, the paramount nuclear state in Europe, overtook more than five arduous years of negotiations between the US and Egypt. It may betoken a major victory for France's nuclear export program, as well as signaling an effort by Egypt to distance itself from its prominent association with the US.

Neither Paris nor Cairo has published the agreement, which was announced Feb. 12 during Egyptian President Anwar Sadat's quick state visit to Paris. French officials, however, left quickly thereafter for Cairo to work out further details. *TEgypt's Minister of Energy Ezzlel-din Halal declared that the accord includes two 900-megawatt power reactors, analogous to those which France now installs domestically at the rate of almost one per month. The export value exceeds $2 billion.

Both Westinghouse, the US competitor for the reactor contract, and the US Department of State play down the French agreement. They cite other examples of accords signed by France that did not lead to firm export contracts -- as in China for nuclear plants, or in Morocco for a set of industrial projects.

Some analysts argue that Egypt is using the agreement to catalyze the long-awaited accord with the US. But other factors suggest the deal is real, paralleling moves throughout the Arab world toward cooperation with West Europe rather than with the US.

The Aswan Dam is efectively at full capacity, and the only other major hydro option -- the Qattara Depression project -- involves channeling Mediterranean water 150 kilometers southward from the coast into a deep depression. The Qattara scheme is both economically and ecologically dubious and is generally discounted as improbable.

Egypt thus hopes to replace conventional oil-or gas-fired thermal power stations with nuclear reactors, freeing its limited amounts of more valuable oil for profitable export to Europe. Each reactor could release some 9 million barrels of oil per year for export -- almost $350 million at current prices, and the savings escalate with higher oil prices.

The pair of French reactors would thus save more foreign exchange than the gross earnings of the Suez Canal. Not surprisingly, the deal looms enticingly large in Egyptian economic planning.

The rapid signing of the French accord, coupled with President Sadat's unilateral ratification of the Nuclear Non-Proliferation Treaty on feb. 26, contrast dramatically with the prior languid pace of US-Egyptian nrgotiations. Westinghouse's discussions with Egypt over the sale of one 600-megawatt reactor, a size not built in the US, go back at least to 1975.

Westinghouse was willing to sell, but the tortuous and tortoise- paced negotiations focused on obtaining the US export license and were an irritant in US-Egyptian relations. An agreement already was initialed in late 1976. But the US then reneged, arguing that the Congress was "not yet ready."

US negotiators had tied the Egyptian agreement to a tandem arrangement with Israel. But the Israelis persistently refused to accept non-proliferation safeguards, further delaying discussions -- gratuitously, in the Egyptian view.

Egyptian officials have voiced increasing doubts over the past year about US good faith. They privately accused the US of deliberately obstructing agreement on one hand, while eliminating any alternative option on the other.

It was known to Egypt that the US had exerted diplomatic pressure on France to forestall an earlier French export effort. They bitterly contrasted US efforts to impose ever more stringent controls on spent reactor fuel in Egypt while allegedly supplying Israel both with weapons-grade fissile material and detailed nuclear weapons designs.

Now, however, the US negotiating team is expected to complete the agreement with CAiro shortly -- a much simpler task since President Sadat defused the plutonium issue by ratifying the Non- Proliferation Treaty.

The main US argument now is that the reactor cannot be financed. This tends to fuel lingering Egyptian suspicions about US intentions. Even in 1976, Egyptian sources argue, the oil savings were large enough to pay off the plant in less than 10 years. Since then, higher oil prices have telescoped the payoff period to le ss than four years.